Stocks stumbled out of the gate on the first day of September — slammed by uncertainty about President Trump’s tariffs as well as his increasingly bold moves to exert influence over the Federal Reserve.
Bond yields spiked on Monday after a federal appeals court late Friday ruled most of Trump’s tariffs were unconstitutional — raising speculation Washington may have to refund billions in duties collected under the policy.
Trump said he expects the ruling by the “partisan” panel will be overturned by the Supreme Court.
Nevertheless, stocks tumbled as the 30-year US Treasury touched 5%, while the 10-year approached 4.3% as worries increased that the US will be forced to issue more debt to fund its deficits because of lost tariff revenue.
The Dow Jones Industrial Average slid 380 points, or 0.84%, to 45,164.21, while the S&P 500 fell 62.75 points, or 0.97%, to 6,397.51.
The tech-heavy Nasdaq Composite dropped 232.23 points, or 1.08%, to 21,223.33.
“The stock market’s down because the stock market needs the tariffs,” Thomas Tzitzouris at Strategas told Bloomberg. “They want the tariffs.”
Meanwhile, Wall Street is waiting for a judge to decide on Trump’s efforts to fire Fed governor Lisa Cook.
The president has been pressuring the central bank to cut rates, fueling concerns about inflation and the Fed’s independence.
The Russell 2000 also lost nearly 1%, and the CBOE Volatility Index, Wall Street’s fear gauge, spiked 11.7% to 18.
The sell-off comes as investors brace for a turbulent month. September is historically the market’s weakest stretch, with the S&P 500 averaging a 4.2% decline over the past five years.
Big Tech led the sell-off, with Amazon and Alphabet both sliding more than 2% as traders rotated out of high-valuation names.
After a summer rally that saw the benchmark notch five record closes and briefly top 6,500, traders are now contending with fresh macroeconomic and political headwinds.
Attention now turns to the Federal Reserve’s Sept. 16–17 policy meeting.
Fed Chair Jerome Powell has “opened the door” to a rate cut but stressed caution, making this Friday’s jobs report a critical catalyst for the market’s next move.
Safe-haven demand is surging. Gold smashed through $3,500 an ounce for the first time, while silver crossed $40, underscoring investors’ flight to safety.
Bitcoin briefly reclaimed $111,000 but remains a distant second to bullion’s rally.
On Wall Street, Constellation Brands tumbled 7.1% after the beer, wine and spirits company warned that it’s seen a slowdown in purchases of its high-end beers, particularly among its Hispanic customers. That pushed it to slash its forecast for profit this fiscal year.
Kraft Heinz fell 7.5% after announcing that it’s splitting into two, a decade after a merger of the brands created one of the biggest food companies on the planet.
One of the companies will include shelf stable meals and include brands such as Heinz, Philadelphia cream cheese and Kraft Mac & Cheese. The other will include the Oscar Mayer, Kraft Singles and Lunchables brands. The official names of the two companies will be released later.
Among the market’s few gainers was PepsiCo, which rose 1.6% after an investment firm said it sent suggestions to the company’s board to reaccelerate its growth and boost financial performance.
The investor, Elliott Investment Management, has a history of buying into companies and then pushing for big changes that can lead to better stock performance.
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